directing the attorney general of the state of hawaii to
investigate cases where fraudulent transfers and assignments of mortgage loan
documents are alleged.

WHEREAS, Hawaii has been experiencing a mortgage
crisis since 2004; and

WHEREAS, the mortgage crisis resulted from a
number of problems in the housing market, including an increase in
non-traditional mortgages such as risky subprime loans, inflated appraisals,
systematic abandonment of underwriting practices by lenders, and unstable
risk-management practices; and

WHEREAS, foreclosures of people's homes have
resulted in vacant homes, homelessness, and declining property values and neighborhoods;
and

WHEREAS, mortgage defaults led to a record number
of foreclosures across the nation and in Hawaii; and

WHEREAS, from 2006 through 2009, there were more
than 6 million foreclosures nationwide as compared to only 100,000 foreclosures
in 2005; and

WHEREAS, the national rate for foreclosures has
increased an additional 23 percent since 2008, with approximately 2.9 million
home mortgages in the United States in foreclosure in 2010; and

WHEREAS, according to the Year-End 2010
Foreclosure Market Report, there were a total of 3,825,637 foreclosure filings,
including default notices, scheduled auctions, and bank repossessions; and

WHEREAS, the rate of foreclosure for 2011 and 2012
was predicted to exceed the foreclosure rate of 2010, and the 2011 foreclosure
filings have overwhelmed the courts and lenders; and

WHEREAS, the ongoing housing crisis and
significant increase in mortgage delinquencies and foreclosures have exacerbated
the current financial crisis; and

WHEREAS, according to the Federal Bureau of Investigation,
mortgage fraud is a growing criminal threat that is hurting homeowners,
businesses, and the national economy; and

WHEREAS, investigations by the Federal Bureau of
Investigation and other law enforcement entities, including state attorney
generals, have focused on fraud related to loan origination, mortgage loan
securitization, and mortgage servicing; and

WHEREAS, in the fall of 2010, nationwide reports
exposed fraudulent foreclosure filings, which included the practice of signing
mortgage documents without first verifying the contents, a practice often
referred to as "robo-signing"; and

WHEREAS, there are now alleged cases of fraudulent
assignments of mortgage, affidavits of foreclosure, and transfers of title,
including instances of fraudulent signatures; and

WHEREAS, securities fraud lawsuits have been filed
on behalf of the beneficiaries of state pension funds, including a class action
lawsuit against Merril Lynch, now owned by Bank of America, for providing misleading
documents for $16,500,000 in certificates; and

WHEREAS, banks are required to register with
recordation offices in each state and pay certain fees for each sale or resale
of a mortgage; and

WHEREAS, many banks utilized the Mortgage
Electronic Registration Systems electronic mortgage registry, which permitted
these financial institutions to repeatedly avoid paying local fees and taxes;
and

WHEREAS, local communities lost local tax revenue
through banks' fraudulent behavior and local counties are now suing to reclaim
the significant amount of lost revenue; and

WHEREAS, it appears many loan transfers,
assignments of mortgage, and quitclaim deeds may have been fraudulent and their
filing statuses inaccurate due to illegal loan transfers and lack of
recordation at the state level; and

WHEREAS, fraudulent documents filed by lenders and
the failure to follow securities procedures have clouded property title in
Hawaii and damaged borrowers and subsequent purchasers; and

BE IT RESOLVED by the Senate of the Twenty-sixth
Legislature of the State of Hawaii, Regular Session of 2012, the House of
Representatives concurring, that the Attorney General of the State of Hawaii is
directed to investigate instances where homeowners allege fraudulent mortgage
documents, assignments of mortgage, or title transfers, and to take action so
that any financial settlement reached with mortgage servicers appropriately
compensates for, and accurately reflects, the extent of the negative impact on all
the victims of the fraud, including homeowners and the State; and

BE IT FURTHER RESOLVED that certified copies of
this Concurrent Resolution be transmitted to the Governor, Attorney General,
and Director of Commerce and Consumer Affairs.

OFFERED
BY:

_____________________________

Report Title:

Fraudulent Mortgage Documents, Assignments of Mortgage,
and Title Transfers